Direct Effect Introduction

Chapter 3 European Law I: Nature – Direct Effect

1. Primary Union Law: The Effect of the Treaties a. Direct Effect: From Strict to Lenient Test b. The Dimensions of Direct Effect: Vertical and Horizontal Direct Effect 2. Direct Union Law: Regulations and Decisions a. Regulations: The ‘Legislative’ Instrument aa. General Application in All Member State bb. Direct Application and Direct Effect b. Decisions: The Executive Instrument aa. Specifically Addressed Decisions bb. Non-addressed Decisions 3. Indirect Union Law: Directives a. Direct Effect and Directives: Conditions and Limits aa. The No-horizontal-direct-effect Rule bb. The Limitation to the Rule: The Wide Definition of State (Actions) cc. The Exception to the Rule: Incidental Horizontal Direct Effect b. Indirect Effects through National and (Primary) European Law aa. The Doctrine of Consistent Interpretation of National Law bb. Indirect Effects through the Medium of European Law 4. External Union Law: International Agreements a. The Conditions for Direct Effect b. The Dimensions of Direct Effect

* Introduction

Classic international law holds that each State can choose the relationship between its domestic law and international law. Two – constitutional – theories thereby exist: monism and dualism. Monist States make international law part of their domestic legal order. International law will here directly apply as if it were domestic law. By contrast, dualist States consider international law separate from domestic law. International law is viewed as the law between States; national law is the law within a State. While international treaties are thus binding ‘on’ States, they cannot be binding ‘in’ States. International law needs to be ‘transposed’ or ‘incorporated’ into domestic law and will thus only have indirect effects through the medium of national law. The dualist theory is therefore based on a basic division of labour: international institutions apply international law, while national institutions apply national law.

* All footnotes omitted.

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Did the European Union leave the choice between monism and dualism to its Member States? For dualist States, all European law would need to be ‘incorporated’ into national law before it could have domestic effects. Here, there is no direct applicability of European law, as all European norms are mediated through national law and individuals will consequently never come into direct contact with European law. Where a Member State violates European law, this breach can only be established and remedied at the European level. The European Treaties indeed contained such an ‘international’ remedial machinery against recalcitrant Member States in the form of enforcement actions before the Court of Justice. Another Member State or the Commission – but not individuals – could here bring an action to enforce their rights. Did this not signal that the European Treaties were international treaties that tolerated the dualist approach? Not necessarily, for the Treaties also contained strong signals against the ‘ordinary’ international law reading of the European legal order. Not only was the Union entitled to adopt legal acts that were to be ‘directly applicable in all Member States’, but from the very beginning, the Treaties also contained a judicial mechanism that envisaged the direct application of European law by the national courts. But even if a monist view had not been intended by the founding Member States, the European Court discarded any possible dualist readings of Union law in the most important case of European law: Van Gend en Loos. The Court here expressly cut the umbilical cord with classic international law by insisting that the European legal order was a ‘new legal order’. In the famous words of the Court:

The objective of the E[U] Treaty, which is to establish a common market, the functioning of which is of direct concern to interested parties in the [Union], implies that this Treaty is more than an agreement which merely creates mutual obligations between the contracting States. This view is confirmed by the preamble to the Treaty which refers not only to the governments but to peoples. It is also confirmed more specifically by the establishment of institutions endowed with sovereign rights, the exercise of which affects Member States and also their citizens. Furthermore, it must be noted that the nations of the States brought together in the [Union] are called upon to cooperate in the functioning of this [Union] through the intermediary of the European Parliament and the Economic and Social Committee.

In addition the task assigned to the Court of Justice under Article [267 TFEU], the object of which is to secure uniform interpretation of the Treaty by national courts and tribunals, confirms that the States have acknowledged that [European] law has an authority which can be invoked by their nationals before those courts and tribunals. The conclusion to be drawn from this is that the [Union] constitutes a new legal order of international law for the benefit of which the States have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only Member States but also their nationals. Independently of the legislation of Member States, [European] law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage.

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All judicial arguments here marshalled to justify a monistic reading of European law are debatable. But with a stroke of the pen, the Court conﬁrmed the independence of the European legal order from classic international law. Unlike ordinary international law, the European Treaties were more than agreements creating mutual obligations between States. All European law would be directly applicable in the national legal orders; and it was to be enforced in national courts – despite the parallel existence of an international enforcement machinery. Individuals were subjects of European law and individual rights and obligations could consequently derive directly from European law.

Importantly, because European law is directly applicable law, the European Union would also itself determine the effect and nature of European law within the national legal orders. The direct applicability of European law thus allowed the Union centrally to develop two foundational doctrines of the European legal order: the doctrine of direct effect and the doctrine of supremacy. The present chapter deals with the doctrine of direct effect; Chapter 4 deals with the doctrine of supremacy.

What is the doctrine of direct effect? It is vital to understand that the Court’s decision in favour of a monistic relationship between the European and the national legal orders did not mean that all European law would be directly effective, that is: enforceable by national courts. To be enforceable, a norm must be ‘justiciable’, that is: it must be capable of being applied by a public authority in a specific case. But not all legal norms have this quality. For example, where a European norm requires Member States to establish a public fund to guarantee unpaid wages for insolvent private companies, yet leaves a wide margin of discretion to the Member States on how to achieve that end, this norm is not intended to have direct effects in a specific situation. While it binds the national legislator, the norm is not self-executing. The concept of direct applicability is thus wider than the concept of direct effect. Whereas the former refers to the internal effect of a European norm within national legal orders, the latter refers to the individual effect of a norm in specific cases. Direct effect requires direct applicability, but not the other way around. However, the direct applicability of a norm only makes its direct effect possible.

After all these terminological preliminaries, when will European law have direct effect? And are there different types of direct effect? This chapter explores the doctrine of direct effect across the various sources of European law. It will start with the direct effect of the European Treaties in section 1. The European Treaties however also envisage the adoption of European secondary law. This secondary law may take various forms. These forms are deﬁned in Article 288 TFEU, which deﬁnes the Union’s legal instruments and states:

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[1] To exercise the Union’s competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions.

[2] A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

[3] A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.

[4] A decision shall be binding in its entirety. A decision which speciﬁes those to whom it is addressed shall be binding only on them.

[5] Recommendations and opinions shall have no binding force.

The provision thus acknowledges three binding legal instruments – regulations, directives, and decisions – and two non-binding instruments. Why was there a need for three distinct binding instruments? The answer seems to lie in their speciﬁc – direct and indirect – effects in the national legal orders. While regulations and decisions were considered Union acts that directly established legal norms (section 2), directives appeared to be designed as indirect forms of legislation (section 3).

Sadly, Article 288 TFEU is incomplete, for it only mentions the Union’s internal instruments. A fourth binding instrument indeed needs to be ‘read into’ the list: international agreements. For Union agreements are not only binding upon the institutions of the Union, but also ‘on its Member States’. Did this mean that international agreements were an indirect form of external legislation, or could they be binding ‘in’ the Member States? Section 4 will analyse the doctrine of direct effects for international agreements.

Part I Constitutional Foundation